Transocean releases internal investigation report into DWH disaster

The following is a press release issued by Transocean regarding an internal investigation into the causes of the Deepwater Horizon disaster. The full report can be found on the Transocean website HERE.

ZUG, SWITZERLAND Transocean Ltd. (NYSE: RIG) (SIX: RIGN) today announced the release of an internal investigation report on the causes of the April 20, 2010, Macondo well incident in the Gulf of Mexico.

Following the incident, Transocean commissioned an internal investigation team comprised of experts from relevant technical fields and specialists in accident investigation to gather, review, and analyze the facts and information surrounding the incident to determine its causes.

The report concludes that the Macondo incident was the result of a succession of interrelated well design, construction, and temporary abandonment decisions that compromised the integrity of the well and compounded the likelihood of its failure. The decisions, many made by the operator, BP, in the two weeks leading up to the incident, were driven by BP’s knowledge that the geological window for safe drilling was becoming increasingly narrow. Specifically, BP was concerned that downhole pressure — whether exerted by heavy drilling mud used to maintain well control or by pumping cement to seal the well — would exceed the fracture gradient and result in fluid losses to the formation, thus costing money and jeopardizing future production of oil.

The Transocean investigation team traced the causes of the Macondo incident to four overarching issues:

-- Risk Management and Communication: Evidence indicates that BP failed
to properly assess, manage and communicate risk to its contractors.
For example, it did not properly communicate to the drill crew the
absence of adequate testing on the cement or the uncertainty
surrounding critical tests and procedures used to confirm the
integrity of the barriers intended to inhibit the flow of hydrocarbons
into the well. It is the view of the investigation team that the
actions of the drill crew on April 20, 2010, reflected the crew's
understanding that the well had been properly cemented and
successfully tested.
-- Well Design and Construction: The precipitating cause of the Macondo
incident was the failure of the downhole cement to isolate the
reservoir, which allowed hydrocarbons to enter the wellbore. Without
the failure of the cement barrier, hydrocarbons would not have entered
the well or reached the rig. While drilling the Macondo well, BP
experienced both lost circulation events and kicks and stopped short
of the well's planned total depth because of an increasingly narrow
window for safe drilling, specifically a limited margin between the
pore pressure and fracture gradients. In the context of these delicate
conditions, cementing a long-string casing would increase the risk of
exceeding the margin for safe drilling. But rather than adjusting the
production casing design to avoid this risk, BP adopted a technically
complex nitrogen foam cement program that allowed it to retain its
original casing design. The resulting cement program was of minimal
quantity, left little margin for error, and was not tested adequately
before or after the cementing operation. Further, the integrity of the
cement may have been compromised by contamination, instability and an
inadequate number of devices used to center the casing in the
wellbore.
-- Risk Assessment and Process Safety: Based on the evidence, the
investigation team determined that BP failed to properly require or
confirm critical cement tests or conduct adequate risk assessments
during various operations at Macondo. Halliburton and BP did not
adequately test the cement slurry program, despite the inherent
complexity, difficulties and risks associated with the design and
implementation of the program and some test data showing that the
cement would not be stable. BP also failed to assess the risk of the
temporary abandonment procedure used at Macondo, generating at least
five different temporary abandonment plans for the Macondo well
between April 12, 2010 and April 20, 2010. After this series of
last-minute alterations, BP proceeded with a temporary abandonment
plan that created unnecessary risk and did not have the required
approval by the MMS. Most significantly, the final plan called for
underbalancing the well before conducting a negative pressure test to
verify the integrity of the downhole cement or setting a cement plug
to act as an additional barrier to flow. It does not appear that BP
used risk assessment procedures or prepared Management of Change
documents for these decisions or otherwise addressed these risks and
the potential adverse effects on personnel and process safety.
-- Operations:
-- Negative Pressure Test: The results of the critical negative
pressure test were misinterpreted. Post-incident investigation
determined that the negative test was inadequately set up because
of displacement calculation errors, a lack of adequate fluid
volume monitoring, and a lack of management of change discipline
when the well monitoring arrangements were switched during the
test. It is now apparent that the negative pressure test results
should not have been approved, but no one involved in the negative
pressure test recognized the errors. BP approved the negative
pressure test results and decided to move forward with temporary
abandonment. The well became underbalanced during the final
displacement, and hydrocarbons began entering the wellbore through
the faulty cement barrier and a float collar that likely failed to
convert. None of the individuals monitoring the well, including
the Transocean drill crew, initially detected the influx.
-- Well Control: With the benefit of hindsight and a thorough
analysis of the data available to the investigation team, several
indications of an influx during final displacement operations can
be identified. Given the death of the members of the drill crew
and the loss of the rig and its monitoring systems, it is not
known which information the drill crew was monitoring or why the
drill crew did not detect a pressure anomaly until approximately
9:30 p.m. on April 20, 2010. At 9:30 p.m., the drill crew acted to
evaluate an anomaly. Upon detecting an influx of hydrocarbon by
use of the trip tank, the drill crew undertook well-control
activities that were consistent with their training including the
activation of various components of the BOP. By the time actions
were taken, hydrocarbons had risen above the blowout preventer and
into the riser, resulting in a massive release of gas and other
fluids that overwhelmed the mud gas separator system and released
high volumes of gas onto the aft deck of the rig. The resulting
ignition of this gas cloud was inevitable.
-- Blowout Preventer (BOP): Forensic evidence from independent
post-incident testing by Det Norske Veritas (DNV) and evaluation
by the Transocean investigation team confirm that the Deepwater
Horizon BOP was properly maintained and operated. However, it was
overcome by the extreme dynamic flow, the force of which pushed
the drill pipe upward, washed or eroded the drill pipe and other
rubber and metal elements, and forced the drill pipe to bow within
the BOP. This prevented the BOP from completely shearing the drill
pipe and sealing the well.
-- Alarms, Muster, and Evacuation: In the explosions and fire, the
general alarm was activated, and appropriate emergency actions
were taken by the Deepwater Horizon marine crew. The 115 personnel
who survived the initial blast mustered and evacuated the rig to
the offshore supply vessel Damon B. Bankston.

The Transocean internal investigation team began its work in the days immediately following the incident. Through an extensive investigation, the team interviewed witnesses, reviewed available information regarding well design and execution, examined well monitoring data that had been transmitted real-time from the rig to BP, consulted industry and technical experts, and evaluated available physical evidence and third-party testing reports.

The loss of evidence with the rig and the unavailability of certain witnesses limited the investigation and analysis in some areas. The team used its cumulative years of experience but did not speculate in the absence of evidence. The report of the team does not represent the legal position of Transocean, nor does it attempt to assign legal responsibility or fault.

The investigation report and supporting documents are available on the homepage of the Company’s website HERE.

Transocean is the world’s largest offshore drilling contractor and the leading provider of drilling management services worldwide. With a fleet of 138 mobile offshore drilling units as well as three high-specification jackups under construction, Transocean’s fleet is considered one of the most modern and versatile in the world due to its emphasis on technically demanding segments of the offshore drilling business. Transocean owns or operates a contract drilling fleet of 47 High-Specification Floaters (Ultra-Deepwater, Deepwater and Harsh-Environment semisubmersibles and drillships), 25 Midwater Floaters, nine High-Specification Jackups, 53 Standard Jackups and other assets utilized in the support of offshore drilling activities worldwide.

For more information about Transocean, please visit our website at www.deepwater.com.

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